Q IS the UK still borrowing lots every year?
The contentious subject of the Government deficit, as discussed by all the contending parties in this year’s general election campaign, was brought into sharp focus in April.
Back in March, the independent Office for Budget Responsibility (OBR) forecast that the UK Government’s borrowing in 2014-15 would be £90.2bn.
However, the official figures, released by the Office for National Statistics (ONS) in April, showed a lower figure for the financial year of £87.3bn.
March 2015’s borrowing saw a fall of £400 million from the same month last year and the total was £11.1bn lower than last year.
A strong increase in the Government’s revenue from income tax and national insurance, amounting to £15.5bn in March, was mainly responsible for this improvement in overall borrowing.
This is very good news, given that Government borrowing peaked at £153bn in the 2009-10 financial year, at the height of the financial crisis and at the onset of the Great Recession.
This deficit has now halved to 4.8% of Gross Domestic Product (GDP) from the 10% it represented back in 2009-10 financial year.
With a Total Public Sector Net Debt (PSNB) now standing at £1,484bn in March, this represents the equivalent of 80.4% of GDP; this is £500 million higher than it stood in the year before this current Government took power.
Whilst showing an encouraging downward trend, many commentators voice concern that the fiscal deficit is still a major issue and are calling for a mature debate on the subject across the board.
Ms Sumita Shah, Regulatory Policy Manager, Public Sector, at the Institute of Chartered Accountants in England and Wales (ICAEW), was quoted as saying: “Whoever forms the next Government will have to face up to the stark reality of the UK’s fiscal position.”
So it now looks like David and George have their work cut out.
Warren Shute chartered Financial Planner with Levington Wealth Management warren@levingtonwealth.co.uk
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